Government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac have announced new tenant protection requirements for multifamily properties backed by their mortgages.
Effective February 28, 2025, the new policy mandates that borrowers of all new GSE-backed loans provide:
- 30-day written notice for rent increases
- 30-day written notice of lease expirations
- A minimum five-day grace period for late rent payments without fees or other penalties
Manufactured housing, cooperative housing, and short-term leases are exempt.
Borrowers will have six months after loan closing to update their leases and must fully comply within 24 months. Lenders will conduct regular inspections during this period, and noncompliance could result in penalties, including a penalty of 0.20% of the original loan amount or default status.
While the stricter requirements and increased lender due diligence could slow down deal activity in the multifamily sector, GSEs see the new policy as necessary to protect tenants.
“Although many borrowers already exceed these minimum standards, all will be required to meet the standards to obtain GSE financing in the future,” said Kevin Palmer, head of multifamily for Freddie Mac.
Property managers should ensure landlords seeking GSE-backed multifamily mortgages are informed of these new requirements.
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